June 12, 2017 / bao / Comments Off on GGP: U.S. Statement On LNG To China May Signal A Shift To A Less Transparent Approach To Energy Policy

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This is an excerpt of an article by the Baker Institute, also published by Forbes on May 15, 2017.

On May 11the Department of Commerce issued a 100-Day Action Plan stemming from the recent dialogue between President Trump and Chinese President Xi Jinping at Mar-a-Lago. Among other things, the Commerce Department signaled a willingness to export U.S. natural gas to China in the form of liquefied natural gas, or LNG. The Department of Commerce welcomed China, as well as any other trading partner, to receive imports of LNG from the United States, and guaranteed that China would be treated no less favorably than other non-FTA trade partners.

The Department of Commerce framed its statement as a ?consensus on initial commitments? stemming from the Mar-a-Lago meeting. Given that the statement substantively plows no new ground on energy policy, there are two ways to think about it. One could frame it as a mom-and-apple-pie declaration of cooperation that simply restates principles that were already in place. Conversely, it might be an indication of a new, less transparent, more transactional approach to energy policy based on bilateral negotiations.

The first explanation is business as usual, but the second should give us pause.

The United States government has long stated that it is not its policy to discriminate against China with regards to LNG exports. The Obama administration, on various occasions, directly communicated this in engagements with Chinese officials. A joint communiqué following the July 2013 Strategic and Economic Dialogue between the U. S. and China stated that the United States was following the statutory process required for export of LNG to countries with which the United States does not have a free trade agreement, such as China. In July of the following year the U. S. government reiterated this position further stating that in non-FTA evaluations the United States ?applies the same rules in every case?, and that any investment in LNG facilities in either the United States or China should be consistent with ?commercial- and market-oriented principles.?

Christopher Smith

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